El Martillito: Lessons from the hammer

It’s a utilitarian symbol, the hammer. It’s humble—a simple tool, often for a simple task. It’s also essential, the one tool necessary to build, embodying the idea of determination and strength. It’s no surprise then that el martillito, the little hammer, has symbolized the evolution of Padron Cigars for more than half a century.

“For us, the hammer is a symbol of hard work, perseverance and a commitment to certain philosophies on how to do things and taking pride in what you do,” explains Jorge Padron, president of Padron Cigars. “There’s a lot of things I’ve learned from that story. It takes a lot of commitment to say to yourself, ‘You know what, I’m strong. I can work. I need to push forward.’ So the hammer reminds us of where we came from.”

That story starts in 1962 amid a tumult of both cultural and political upheaval throughout the Americas, when Jose Padron, father of Jorge and patriarch of the Padron Cigars business, arrived in exile from Cuba. This was the time of the Cuban revolution, the Bay of Pigs, the missile crisis and the start of the Vietnam War. And this was a city of Miami on the verge of a cultural transformation. At 36, Jose was one of thousands of refugees banished from their ancestral home, eventually arriving on the southeast shores of Florida to start again.

It wasn’t easy. As part of the U.S. government’s Cuban refugee program, Jose received $60 per month while looking for employment—a mixed blessing in Jose’s eyes. “Every time I cashed that check, I felt like a burden on the country that had taken me in,” he says.

He looked for jobs every day until a friend at the Cuban refugee office offered him carpentry work. Jose gladly accepted, ready to “become self-sufficient and not depend on a government handout.” He also accepted a gift of a hammer, which his friend simply asked him to put to good use. For the next two years, Jose did just that, working as a gardener during the day and, at night with his martillito, as a carpenter.

He worked and he saved, and he also began to notice an opportunity. He couldn’t find a good cigar in Miami, a town bursting with people from a country with the greatest tobacco heritage in the world. As a third-generation Cuban cigar maker, it wasn’t a huge leap for Jose to recognize a basic business principle: Fill the needs of the market. So with $600 saved and just two years in his adopted country, he rented a storefront in Little Havana and began selling Cuban-seed cigars at 25 cents each. They were an instant hit in the community.

As the company grew, his need for experienced rollers and raw materials did as well, prompting Jose to look beyond Florida’s shores. That’s when he took a visit to Nicaragua. “As soon as he sees the tobacco in Nicaragua, he falls in love with it,” explains Jorge. “And he starts buying tobacco from Nicaragua until he opens up his own factory, Tabacos Cubanica, in 1970.”

It was a risk, with an unstable political environment in Nicaragua and the constant threat of kidnappings. But it was also the kind of tobacco that reminded Jose of his family’s farms in Cuba, the type of tobacco that could define his brand. It wasn’t long before the factory in Esteli was employing hundreds of workers, he had closed his Miami factory and his business just continued to grow. But then, in 1978, Nicaragua erupted in civil war—a portent of a volatile and dangerous time in the history of Padron Cigars.

As civil war raged, Padron’s Nicaraguan factory was burned to the ground. Around the same time, Jose traveled to Cuba with other Cuban-American businessmen to negotiate with Fidel Castro for the release of political prisoners. While his efforts eventually helped release thousands from Cuban prisons, a faction of Miami’s Cuban community reacted differently after seeing a photograph of Jose handing Castro a Padron cigar in what was perceived as a bit too friendly atmosphere. There were calls to boycott Padron Cigars and, between 1979 and 1983, the company’s offices in Miami were bombed four times. Three detonated, causing significant damage.

By 1979, the Sandinistas took control of Nicaragua, and Jose successfully negotiated with the new government to keep his operations going in the Central American country. He also opened a factory in Honduras. But, in many ways, it was trying to build on a house of cards. As he kept one eye on safeguarding his operations in Esteli and convincing the new government his business was providing much-needed jobs, his other eye was on the U.S. government’s support of the Sandinistas’ opposition, the Contras. Then, in 1985, the final card fell, with the U.S. imposing an embargo on the country.

“It was basically overnight,” says Jorge. “I think the embargo was voted on in May and it took effect in September. You’re talking five months. Suddenly we were not able to produce any cigars or export anything to the United States from Nicaragua. Fortunately we still had the Honduras factory for production.”

Production was only half the challenge. The only source of tobacco used in Padron Cigars, the tobacco that had made Padron a dependable, consistent brand, was from the volcanic-enriched soil of Nicaragua. Jose wasn’t about to compromise the level of quality synonymous with his name, so for the next five years Padron Cigars operated solely on the inventory of raw material they had built up prior to ’85. Production fell 75 percent.

Jorge started working for the company during that time, and he struggled to understand why his father would let Padron “just disintegrate” like that. He told his father, “We need to get tobacco from somewhere else. Why are we doing this?”

“You know what he says to me, he says, ‘Jorge, listen, it’s taken me all these years to build this company based on this type of product. If I now change my raw material to get tobacco from Honduras or the Dominican Republic, it’s going to change my blend and it will destroy everything I’ve worked for over 27 years. I’d rather produce less and maintain the integrity of the brand than change it.’ At the time I thought he was insane. Imagine, 6 million to 1.5 million in production. But, you know what, it taught me a tremendous lesson.”

The lesson was simple: Protect the brand and don’t deviate from your mission. It paid off. In 1990, Nicaragua held democratic elections, and the embargo was soon lifted. Padron Cigars had survived, barely.

“We went back to Nicaragua in 1990, and it was a disaster,” Jorge says with a subtle smile, reflecting a relief of challenges past. “We had one warehouse, one farm left. We had to start everything from scratch. It took us from 1990 to 2013 to get back to where we were in 1985. And now this year we’re going to produce 7 million cigars.”

That same philosophy is also evident in how Padron creates and manufactures its cigars. “Vertical integration is something we’ve been stressing for years,” Jorge explains. “It’s been the foundation of our business, where we basically control every part from beginning to end. That’s been the secret of our success. We don’t depend on anyone for anything. Basically, you control your own destiny.

The idea of vertical integration evolved through experience, like relying on a box supplier that wasn’t shipping the boxes on time. So instead of continuing to rely on an outside source, Jose bought a box factory and started making his own boxes. No more delays in box deliveries. Jorge adds, “Over the years we’ve been fortunate enough to be able to go even further. We’ve bought more farms in Nicaragua. We’ve built more warehouses. We cultivate more than double the tobacco we need for a regular year’s production. We’re very focused on building for the future, and you can’t do that unless you have all these things in place.”

This long-term outlook extends to the products as well, so it’s not surprising that it’s been 13 years since Padron last debuted a new line of cigars. What is surprising, and what certainly marks a new chapter in the company’s history, is the profile of the new Damaso line—only the fourth line in 51 years for the company.

“I think we’re a company that has a unique product offering, in that we offer all types of products at different price points and profiles,” says Jorge. “The only thing we were missing was a cigar that was in the mild to medium profile.”

It took some convincing to get Jose on board, as that milder profile is a marked departure from Padron’s other lines. “It was interesting, to say the least,” Jorge says with a laugh. “I won’t tell you what he said, but obviously he didn’t initially embrace the concept because that’s not the cigar he would normally smoke. But he’s come to trust me, my sisters and my brothers. If I were to have suggested this 27 years ago, he would have told me to take a hike. Now, he considers it.”

Damaso, named after Jose’s grandfather who immigrated to Cuba from the Canary Islands in the late 1880s, was created to get more people to try Padron and reach that consumer that may have shied away from the company’s reputation for strong cigars.

“We recognized we were missing out every time a consumer walked into a retail shop and requested a milder cigar,” Jorge says. “I want Padron to be in the equation of products that are offered at all levels. So Damaso is a milder cigar but with a lot of flavor. And it’s made with the same consistency and complexity of our other cigars. So it’s not geared toward the typical smoker of Padron that prefers full-body cigars. It’s a product that will appeal to people that would not normally smoke a Padron. Before, when a customer walked into a shop looking for a milder cigar, there wasn’t a Padron to offer. Now you do.”

Jorge says they’re producing Damaso in small production and are ready to see how the market reacts, open to hearing back from consumers.

“For me, this is a marathon, not a sprint,” he explains. “I don’t know if that is good or bad. We want to build the brand. We want people to always trust our brand, and that’s the hardest thing for anyone to get in today’s marketplace, to get consumers to believe what you’re doing and to believe in your brand. The only way to do that is with a long-term vision.”

It’s clear el martillito’s lessons have reached the next generation of Padron Cigars.